Lewiston, Ida. formed a stormwater utility, charging a fee to parcel owners for managing the City’s stormwater system.
By enacting “Ordinance No. 4512″ they established a fee to fund the utility. Any parcel connected to the stormwater system was responsible for the new fee. The rates varied by property type, with different structures for commercial and residential parcels. The ordinance also established “Equivalent Residential Units” (“ERUs”) as a means of assessing the fee for any given property. The ordinance defined an ERU asa residential property with an impervious surface of 4000 square feet. Non-residential property owner fees were calculated via a sliding scale, based on the number of ERUs in consideration of site specific quantification of impervious surfaces. So, more asphalt, more ERUs. More ERUs, the higher the fee.
Fees, like the amount you might pay to a parking meter, often require no voter approval. On the other hand, taxes usually do. The Idaho Legislature has authority to authorize taxes.
The central question here; Is this a tax or a fee?
Several entities, including a school district, a community college, the county, a port district, and an irrigation district sued the City. They claimed that the City had an obligation to put this to a vote, asserting this amounts to a tax. The plaintiffs prevailed. It was determined that the City exceeded it’s authority.
The City appealed this decision, where it was heard by the Idaho Supreme Court. The Idaho Supreme Court affirmed the lower court’s decision. In the summary, the Court concluded that the stormwater fee amounts to an unauthorized tax.
The City’s case was weakened by the fact that certain properties within the Utility have their own storm drainage system, which is not connected to the City’s. Furthermore, the Court found that the City shifted many activities which were previously defined as “street maintenance” to “stormwater maintenance related”. This includes street sweeping, an practice often thought of as a non-structural best maintenance practice (BMP). The Court also found that the City’s methodology for calculating the fee via the ERU did not account for actual use of the stormwater system. Finally the City kept the funds generated from the utility in the same kept in a single checking account, which also holds the City’s general funds.
Other Idaho cities have been caught in the wake. Couer D’Alene is suspending collecting their fees, until it’s certain they have the legal authority to collect it.
The formation of a stormwater utility does provide an additional source of revenue for municipalities. But in doing so, they must be certain to either establish a defensible rationale for the fee.